Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 4/28/2011 1:58 PM
On Wednesday, the S&P 500 rallied 0.6%to another 2009-2011 recovery high. Advancing stocks exceeded losers by a bit less than 2:1 while the up/down volume ratio was positive by a more robust 5:4 margin. Total volume was little changed and remains above its 21-day ma. The daily Coppock Curve has a bullish bias for 20 of the 24 S&P industry groups and for 25 of the 30 stocks in the DJIA.

For some time we have pointed to 1353 as an important resistance level. As a reminder, that is the point at which the rally from the July 2010 low is 61.8% of the previous rally from March 2009 to April 2010. It also confirms the importance of last December’s breakout through 1229, which was a 61.8% retracement of the entire 2007-2009 bear market. When a 61.8% relationship is breached, the next logical Fibonacci multiple is equality. Thus, both the rally of recent months through 1229 and the current breach of 1353 imply that the S&P is positioned to test its 2007 high. Moreover, the fact that the NYSE all-issue advanced decline...
By Walter Murphy on 4/26/2011 3:30 PM
On Monday, the S&P 500 fell 0.2%.  This broke a three-day winning streak and was only the second loss in eight sessions.  Both breadth and the up/down volume ratio were negative by about 3:2.  However, Monday was something of a semi-holiday (as evidenced by the fact that turnover was the lowest of the year), so we may need to take the day with a grain of salt.  The daily Coppock Curve for the 24 S&P industry groups is at a standoff (12 have a bullish bias and 12 have a bearish bias); the majority (18) of the 30 DJIA stocks still has a bearish bias.

In our last blog we presented two possible paths for the S&P.  The bearish count showed that the index was in position for a lower degree third wave decline.  The more bullish count allowed for the possibility that the “500” was in the latter stages of a consolidation that began in February.  It seems that the odds are skewed to the more bullish alternative.  There are a couple of reasons for that observation.

By Walter Murphy on 4/21/2011 9:16 AM
There will be no blog tomorrow or an STR this weekend.

Wednesday was Monday in reverse – and then some.  The S&P 500 rallied 1.4%, which was its biggest percentage change – up or down – in a month.  It was also the fifth gain in six sessions.  Breadth was positive by better than 6:1; the up/down volume ratio was also positive, but by a much more modest 11:4 margin.  This strength was bolstered by a 9% increase in turnover.  However, the daily Coppock Curve still has a bearish bias for 16 of the 24 S&P industry groups and for 20 of the 30 DJIA stocks.

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By Walter Murphy on 4/19/2011 6:53 AM
Below are the “Plain English” summary points from our most recent Short Term Review.  For subscription information for the full reports, please e-mail

Stocks: We have been pointing out that the S&P 500’s February-March decline can be counted as either a complete ABC correction within a larger uptrend or as merely the “A” wave of an even larger post-February ABC correction. The weight of the non-Elliott Wave evidence seems to favor the latter more bearish count, but we have not been able to definitively eliminate either alternative from consideration. However, while the coming week will be a short trading week, it could still tell us a lot about which count is correct.

The Rest of the World: Every one of the eight up markets last week was a developing market. This bolsters our view that developing markets are improving – even breaking out – relative to the larger developed markets. We expect this relative...
By Walter Murphy on 4/14/2011 4:04 PM

On Wednesday, the S&P 500 posted a minimal 0.02% gain.  Nonetheless, this was enough to break a four-day losing streak.  Breadth was positive by a 13:12 ratio, but the up/down volume ratio was negative a 5:4 margin.  Total volume fell by 10%.  The daily Coppock Curve has a bearish bias for 22 of the 24 S&P industry groups and for 26 of the 30 DJIA stocks.

Although the “500” managed to finish the day with a net gain, its intraday high and low were both lower than those seen on Tuesday.  Thus, the decline from Friday’s high remains an uninterrupted downtrend.  Nothing goes straight up or down, so a rally through 1321-1322 would help add some definition to the trend.  Below 1309-1305, support is apparent at 1294-1284, then 1249.

By Walter Murphy on 4/13/2011 3:46 PM
On Tuesday, the S&P 500 suffered its fourth straight loss with a decline of 0.8%.  The index has not had a four-day losing streak since last November. Declining stocks overwhelmed winners by better than 4:1 while the up/down volume ratio was negative by a more modest 5:3 margin.  Total volume increased by 22%, which was enough to carry turnover through its 21-day ma for the first time since mid March.  The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups and for 22 of the 30 DJIA stocks.

As noted, volume moved through its 21-day ma since mid March.  Similarly, the number of declining stocks on Tuesday was also the highest since mid March.  Thus, even though the S&P is on a four-day losing streak, we would note that today’s breadth and momentum pressures were the most intense of the four days.  This suggests an acceleration.  It is also important to realize that the pressures in mid March occurred in an oversold market that was probing for a bottom.  By contrast, the current market...
By Walter Murphy on 4/11/2011 2:16 PM

Stocks: With internal divergences and excessively bullish sentiment overhanging the market, it is important to note that on Friday the S&P recorded its first lower low within the March-April uptrend on the daily chart. Since the March-April rally is a corrective seven-wave structure, it is still possible to count this rally as a “B” wave following the February-March three-wave “A” wave. A coming “C” wave would be expected to at least test – and probably penetrate – the March low at 1249.

By Walter Murphy on 4/8/2011 2:42 PM
There will no blog tomorrow.

On Wednesday, the S&P 500 rallied 0.2%; this was its 11th gain in the last 15 days. Advancing stocks exceeded losers by 7:5 while the up/down volume ratio was positive by a more robust 9:5 margin.  Total volume increased 5% to its highest level in 12 days, but remains below its 21-day ma.  The daily Coppock Curve has a bullish bias for 23 of the 24 S&P industry groups and for 25 of the 30 DJIA stocks.

As most readers know, we believe that the stock market has been in a secular bear market since 2000.  Within that secular pattern, the indexes have been in a cyclical “bull market” (bear market rally) since March 2009.  The strength of this cyclical uptrend is such that it is unlikely that a major reversal is imminent.  Reversals in the weeks ahead are likely to be interruptions, but not reversals of the cyclical uptrend. 

Last week, we pointed out that the recent February-March decline was a clear three-wave pattern.  For all intents and purposes, this left us with...
By Walter Murphy on 4/6/2011 8:26 PM
There will not be a blog on Thursday.

On Tuesday, the S&P 500 posted a very modest (0.02%) loss.  However, advancing stocks edged out losers by 9:8 and the the up/down volume ratio was positive by a more robust 8:5 margin.  Total volume increased (by 18%) for the first time in three days, but is still well below its 21-day ma.  The daily Coppock Curve has a bullish bias for all 24 S&P industry groups and for 29 of the 30 DJIA stocks.

In recent days the DJ Industrials and Transportation indexes, the S&P 400 (mid cap) and 600 (small cap) indexes, and the NYSE advance-decline line have all made new 2009-2011 highs.  The glaring absentee in this group is the S&P 500.  Internally, an examination of the 10 economic sectors reveals that fully half – including the largest (Information Technology) and second largest (Financials) – are still below their previous “bull market” high water mark.

By Walter Murphy on 4/4/2011 5:24 PM
Stocks: The weight of the non-Elliott evidence suggests that we have not seen the final highs. Breadth has broken out to new highs and small cap stocks continue to lead large caps. Historically, important tops do not occur when these conditions exist. Significant tops occur after breadth begins to diverge and when the generals (big cap stocks) begin to lead the troops (small cap stocks). Neither of those conditions is present. As a result, it may come as no surprise that, among the approximately 1850 stocks in the NYSE composite, the 50-day ema is above a rising 200-day for almost 80% of the components. This uptrend continues to show evidence of broad-based participation.

Yields and the Long Bond: We have been making the case that the reversal by 10-year yields from the February 2011 peak was the beginning of a “C” wave decline within an unfolding ABC pattern from the April 2010 reaction high. Overbought momentum and sentiment, along with an initial five-wave decline, all contributed to that evaluation....
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